The court application process for financial settlements

If the parties can’t reach agreement, the next stage is to issue court proceedings. Before commencing court proceedings, most cases (with only a few exceptions) must be referred to mediation. If mediation is not appropriate, or if it fails to produce agreement, an application to the court can be made.

Step 1 – Issuing an application

Either the applicant or respondent starts proceedings by issuing an application. (A fee is paid to the court when the form is lodged). Upon receipt of the application the court issues a timetable requiring each party to file and serve financial statements within a specified period.

A schedule of assets is prepared jointly for the court together with a statement of the issues in the case. Financial statements are provided by each party on a standard form (Form E). The form requires full disclosure of all income and assets and the production of various documents such as bank statements, P60s, business accounts, pension transfer values etc.

The timetable usually allows for either party to raise questions they may have about the other’s financial statement, prior to the first court appointment. The timetable also sets a date for the first court hearing – usually around 3 months after the application is issued, to allow for the preparation of financial statements and any negotiation.

Step 2 – First hearing

The first court hearing is known as the first directions appointment (FDA). It is usually a short hearing when the Judge considers each party’s financial statements and questionnaires, and gives direction as to what further evidence, if any, is needed.

The court will set a time limit for the filing of any further evidence and will adjourn for a further hearing.

Step 3 – Second hearing

The second hearing is known as a financial dispute resolution hearing (FDR). This is normally around 12–15 weeks after the FDA. At the FDR each party’s lawyers are asked to summarise their client’s positions.

The judge will usually indicate the sort of order they would be inclined to make at a final hearing. The judge will urge the parties to try to reach agreement and ensure that they are aware of costs being incurred.

Many cases settle at the FDR because parties review their position in the light of the judge’s indications. If agreement is reached, then this agreement can be incorporated into an order and the judge can be asked to approve the order at this hearing.

The judge can’t compel parties to reach agreement and if agreement isn’t reached the judge will order the case go to a final hearing. If this happens, then the judge who dealt with the FDR can’t sit at this final hearing. The judge at the final hearing won’t be aware of the indication given by the judge at the FDR, so will approach the case completely afresh.

Step 4 – Final hearing

If the case proceeds to a final hearing, then each party gives evidence on oath and will be cross-examined by the other party’s lawyer. At the end of the hearing the judge will make a decision as to the final order. The judge has wide ranging discretion and will make the order that they consider to be fair.

Given that the judge has a wide discretion, in most circumstances it is unlikely that an appeal against the decision will be realistic. Given the uncertainty of the outcome it is preferable for clients to reach agreement prior to a final hearing if possible.